Davis Brown Intellectual Property Law Blog

Conflicting State and Federal Laws May Result in Crippling Blows to Business in the Marijuana Industry - October 6, 2015

As of October 2015, four states have legalized marijuana for recreational use: Alaska, Colorado, Oregon and Washington. The recreational marijuana movement—although slow in terms of states following by legalizing use—has had some big numbers to back up its success: for example, Colorado brought in $36.5 million in tax revenue through the first 11 months of 2014.

Marijuana is clearly a big business, with no signs of slowing down anytime soon. We all know branding and protecting your trademarks are important for any business. However, for a business dealing with “taboo” products —i.e., marijuana—building a brand and controlling the brand is particularly important. As you’ve undoubtedly heard before, there are several strategies for protecting your trademarks and brand. For the vast majority of these businesses, this includes filing federal trademark applications.

Unfortunately for both recreational and medical marijuana dispensaries, this is simply not an option. But how can this be?! The Lanham Act—the controlling statute on trademarks in the United States—has been interpreted by the United States Patent and Trademark Office and courts to only allow federal registrations for trademarks used lawfully in commerce. Because marijuana remains a Schedule 1 drug under the Controlled Substances Act—which prohibits the manufacture, distribution, possession and sale of marijuana and other drugs—dispensaries are technically violating federal law, even if a state has legalized recreational and medical marijuana use. Thus, under the Lanham Act, the manufacture, distribution, possession and sale of marijuana does not qualify as lawful use and will be prohibited from obtaining a federal registration.

Although federal registrations aren’t available for marijuana itself and certain activities surrounding it, there are still several things these companies can do to protect their brands.

Conduct a Trademark Clearance Search

Just because you cannot obtain a federally registered mark, doesn’t mean you should adopt and begin use of a mark without conducting a search of what is currently out there. Trademark rights are based on use. Without a federal application/registration, trademark owners obtain use in their geographic market area. You want to make sure you are clear to operate in your geographic market area (and preferably in all areas).

File State Trademark Registrations

In a state that has legalized marijuana, it is likely you will be able to obtain a state trademark registration. If you are doing business in other states where it is legal, file applications in those states as well. The difference between common law and a state registration is that a state registration immediately gives you rights over the entire state, even if you are not technically in a certain area of that sate.

File Federal Applications on Ancillary Goods

Not all goods and services in the marijuana industry are prohibited under the Lanham Act. In fact, there are several live registrations on the USPTO’s website for various goods and services related to marijuana.

File a Federal Intent-to-Use Application and Wait it Out

An intent-to-use application is one over a mark that has yet to be used in commerce. This application allows trademark owners to hold a place in line until they are ready to launch their product in the marketplace. An intent-to-use application can be drawn out for as long as 4 to 4.5 years before the applicant is required to begin using the mark in commerce. Who knows, maybe in four years the federal laws will have changed and the Lanham Act will allow trademark registrations over marijuana.

Marijuana businesses aren’t totally out of luck when it comes to trademark protection, even if federal registrations are currently off the table. The above steps should provide a level of protection to help secure brands and trademarks until this issue is resolved.

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